Still Not Fully Free

Still Not Fully Free

The
Central Bank
of Brazil is the result of a typically Brazilian compromise. It is a quasi-independent department of the
Finance Ministry, which means that ultimately it is under political control. Yet it has won ? and exercises ? a wide degree of independence over policy and staffing. Incoming governments exercise their right to appoint a new Central Bank president as part of the spoils system, and often vet the board members as well. President Luiz Inácio Lula da Silva was no exception and replaced
Armínio Fraga, a brilliant academic economist and financier, with
Henrique Meirelles, a former top executive at
FleetBoston.
Meirelles had no experience